Trade bloc

A trade bloc is a type of intergovernmental agreement, often part of a regional intergovernmental organization, where barriers to trade (tariffs and others) are reduced or eliminated among the participating states.

Trade blocs can be stand-alone agreements between several states (such as the USMCA) or part of a regional organization (such as the European Union). Depending on the level of economic integration, trade blocs can be classified as preferential trading areas, free-trade areas, customs unions, common markets, or economic and monetary unions.[1]

Use

Stages of economic integration around the World (each country colored according to the most integrated agreement that it participates in):

Economic and monetary union (ECCU/XCD, Eurozone/EUR, Switzerland–Liechtenstein/CHF)

Economic union (CSME, EAEU, EU, GCC, Mercosur, SICA)

Common market (EEA–Switzerland)

Customs and monetary union (CEMAC/XAF, UEMOA/XOF)

Customs union (CAN, EAC, EUCU, SACU)

Multilateral free-trade area (AANZFTA, ASEAN, CEFTA, CISFTA, COMESA, CPTPP, EFTA, GAFTA, PAFTA, RCEP, SADCFTA, SAFTA, USMCA)

Historic trading blocs include the Hanseatic League, a Northern European economic alliance between the 12th and 17th centuries, and the German Customs Union, formed on the basis of the German Confederation and subsequently the German Empire from 1871. Surges of trade bloc formation occurred in the 1960s and 1970s, as well as in the 1990s after the collapse of Communism. By 1997, more than 50% of all world commerce was conducted within regional trade blocs.[2] Economist Jeffrey J. Schott of the Peterson Institute for International Economics notes that members of successful trade blocs usually share four common traits: similar levels of per capita GNP, geographic proximity, similar or compatible trading regimes, and political commitment to regional organization.[3]

Some advocates of global free trade are opposed to trading blocs. Trade blocs are seen by them to encourage regional free trade at the expense of global free trade.[4] Those who advocate for it claim that global free trade is in the interest of every country, as it would create more opportunities to turn local resources into goods and services that are both currently in demand and will be in demand in the future by consumers.[5] However, scholars and economists continue to debate whether regional trade blocs fragment the global economy or encourage the extension of the existing global multilateral trading system.[6][7]

Terminology

A common market is seen as a stage of economic integration towards an economic union[8] or possibly towards the goal of a unified market.

A single market is a type of trade bloc in which most trade barriers have been removed (for goods) with some common policies on product regulation, and freedom of movement of the factors of production (capital and labour) and of enterprise and services.

Statistics

Selection of GDP PPP data (top 10 countries and blocs) in no particular order

*This list is based on the data obtained from United Nations Statistics Division.*
Trade bloc	Population	Gross domestic product (USD)				Members
Trade bloc	Population	2006	2007	growth	per capita	Members
Economic and monetary unions
EMU	324,879,195	10,685,946,928,310	12,225,304,229,686	14.41%	37,630	17 Austria Belgium Cyprus Estonia Finland France Germany Greece Ireland Italy Luxembourg Malta Netherlands Portugal Slovakia Slovenia Spain
OECS (sovereign states)	593,905	3,752,679,562	3,998,281,731	6.54%	6,732	6 Antigua and Barbuda Dominica Grenada Saint Kitts and Nevis Saint Lucia Saint Vincent and the Grenadines
OII	504,476	12,264,278,329	14,165,953,200	15.51%	28,081	3 French Polynesia New Caledonia Wallis and Futuna
CCCM	6,418,417	39,616,485,623	43,967,600,765	10.98%	6,850	12 6 OECS members Barbados Belize Guyana Jamaica Suriname Trinidad and Tobago
Customs and monetary unions
CEMAC	39,278,645	51,265,460,685	58,519,380,755	14.15%	1,490	6 Cameroon Central African Republic Chad Republic of the Congo Equatorial Guinea Gabon
UEMOA	90,299,945	50,395,629,494	58,453,871,283	15.99%	647	8 Benin Burkina Faso Ivory Coast Guinea-Bissau Mali Niger Senegal Togo
Customs unions
CAN	96,924,486	281,269,141,372	334,172,968,648	18.81%	3,448	4 Bolivia Colombia Ecuador Peru
EAC	127,107,838	49,882,030,443	61,345,180,041	22.98%	483	5 Burundi Kenya Rwanda Tanzania Uganda
EUCU	574,602,745	15,331,827,900,202	17,679,376,474,719	15.31%	30,768	33 30 EEA members Andorra San Marino Turkey
GCC	36,154,528	724,460,151,595	802,641,302,477	10.79%	22,200	6 Bahrain Kuwait Oman Qatar Saudi Arabia United Arab Emirates
MERCOSUR	271,304,946	1,517,510,000,000	1,886,817,000,000	12.44%	9,757	5 Argentina Brazil Paraguay Uruguay Venezuela
SACU	58,000,000	1,499,811,549,187	1,848,337,158,281	23.24%	6,885	5 Botswana Lesotho Namibia South Africa Eswatini
Preferential trade areas and Free trade areas
AANZFTA-ASEAN+3	2,085,858,841	10,216,029,899,764	11,323,947,181,804	10.84%	5,429	15 10 ASEAN members Australia China ( Hong Kong) ( Macau) Japan New Zealand South Korea
ALADI	499,807,662	2,823,198,095,131	3,292,088,771,480	16.61%	6,587	12 4 CAN members 5 MERCOSUL members Chile Cuba Mexico
AFTZ	553,915,405	643,541,709,413	739,927,625,273	14.98%	1,336	26 5 EAC members 5 SACU members Angola Comoros Democratic Republic of the Congo Djibouti Egypt Eritrea Ethiopia Libya Madagascar Malawi Mauritius Mozambique Seychelles Sudan Zambia Zimbabwe
APTA	2,714,464,027	4,868,614,302,744	5,828,692,637,764	19.72%	2,147	6 Bangladesh China ( Hong Kong) ( Macau) India Laos Sri Lanka South Korea
CARIFORUM-EUCU-OCTs	592,083,950	15,437,771,092,522	17,798,283,524,961	15.29%	30,060	67 12 CCCM members 33 EUCU members 3 OII members Anguilla Aruba Bahamas British Antarctic Territory British Indian Ocean Territory British Virgin Islands Cayman Islands Dominican Republic Falkland Islands French Southern and Antarctic Lands Greenland Mayotte Montserrat Netherlands Antilles Pitcairn Islands Saint Helena, Ascension and Tristan da Cunha South Georgia and the South Sandwich Islands Saint Pierre and Miquelon Turks and Caicos Islands
CACM	37,388,063	87,209,524,889	97,718,800,794	12.05%	2,614	5 Costa Rica El Salvador Guatemala Honduras Nicaragua
CEFTA	27,968,711	110,263,802,023	135,404,501,031	22.80%	4,841	8 Albania Bosnia and Herzegovina Croatia Kosovo North Macedonia Moldova Montenegro Serbia
CISFTA	272,897,834	1,271,909,586,018	1,661,429,920,721	30.62%	6,088	11 6 EAEC members Armenia Azerbaijan Georgia Ukraine Moldova
DR-CAFTA-US	356,964,477	13,345,469,865,037	14,008,686,684,089	4.97%	39,244	7 5 CACM members Dominican Republic United States ( Puerto Rico)
ECOWAS	283,096,250	215,999,071,943	255,784,634,128	18.42%	904	15 8 UEMOA members Cape Verde Gambia Ghana Guinea Liberia Nigeria Sierra Leone
EEA (EU + EFTA)	499,620,521	14,924,076,504,592	17,186,876,431,709	15.16%	34,400	30 27 EU members Iceland Liechtenstein Norway
EFTA-SACU	68,199,991	1,021,509,931,918	1,139,385,636,888	11.54%	16,707	9 4 EFTA members 5 SACU members
EAEC	207,033,990	1,125,634,333,117	1,465,256,182,498	30.17%	7,077	6 Belarus Kazakhstan Kyrgyzstan Russia Tajikistan Uzbekistan
USMCA	449,227,672	15,337,094,304,218	16,189,097,801,318	5.56%	36,038	3 Canada Mexico United States ( Puerto Rico)
TPP	25,639,622	401,810,366,865	468,101,167,294	16.50%	18,257	4 Brunei Chile New Zealand Singapore
SAARC	1,567,187,373	1,162,684,650,544	1,428,392,756,312	22.85%	911	8 Afghanistan Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka
SPARTECA	35,079,659	918,557,785,031	1,102,745,750,172	20.05%	31,435	21 3 OII members 12 PICTA members Australia Marshall Islands New Zealand Palau Timor-Leste Tokelau
Pacific Alliance	218,649,115	1,371,197,216,140	1,525,825,175,045	11.28%	6,978	4 Colombia Chile Peru Mexico

Comparison between regional trade blocs

		Activities
Regional bloc		Free Trade Area	Economic and monetary union			Free Travel		Political pact	Defence pact	Other
Regional bloc		Free Trade Area	Customs union	Single market	Currency union	Visa-free	Border-less	Political pact	Defence pact	Other
EU		in force	in force⁷	in force²	in force ¹	in force	in force (Schengen ^{1, 7}, NPU and CTA ¹)	in force	in force (CFSP/ESDP ¹)	ESA ^{1, 7}
EFTA		in force		in force^{2, 7}		in force	in force ^{1, 7}		in force ^{1, 7}	ESA ^{1, 7}
CARICOM		in force	in force	in force ¹	in force ¹ and proposed common	in force ¹	proposed	proposed		NWFZ
AU	ECOWAS	in force ^{1, 3}	in force ¹	proposed[9][10]	in force ¹ and proposed for 2012 ¹ and proposed common	in force ¹	proposed	proposed	in force	NWFZ¹
	ECCAS	in force¹	African Continental Free Trade Agreement (AfCFTA)¹	in force¹	proposed	in force¹	in force		in force	NWFZ¹
	EAC	in force	in force	proposed for 2020s	proposed for 2024	proposed	?	proposed for 2023		NWFZ¹
	SADC	in force¹	in force¹	proposed for 2015	de facto in force ¹ and proposed common for 2016	proposed[11]				NWFZ¹
	COMESA	in force¹	proposed for 2010	?	proposed for 2018					NWFZ¹
	Common	in force¹	proposed for 2019	proposed for 2023	proposed for 2028			proposed for 2028		NWFZ¹
Pacific Alliance		in force				in force				NWFZ
USAN	MERCOSUR	in force	in force	proposed for 2015[12]		in force		proposed for 2014[13]		NWFZ
	CAN	in force	in force ¹	proposed¹[14]		in force				NWFZ
	Common	proposed for 2014 ⁴	proposed for not after 2019	proposed for 2019	proposed for 2019	in force[15]	proposed for 2019	proposed	in force	NWFZ
EEU		in force	in force¹	in force	Proposed[16]	in force[17]			in force ¹
AL	GCC	in force	in force[18]	proposed	proposed ¹	in force			in force
AL	Common	in force¹	proposed for 2015	proposed for 2020	proposed			proposed[19]
ASEAN		in force ⁵		proposed for 2015[20]	proposed ⁸[21]	in force[22]		proposed for 2015[23]	proposed for 2020[24]	NWFZ
CAIS		in force¹	proposed	?		in force¹	in force¹	proposed		NWFZ
CEFTA		in force								RCC⁷
USMCA		in force							in force ^{1, 7}
SAARC		in force ^{1, 6}	proposed	proposed		in force⁹
PIF		proposed for 2021¹								NWFZ¹

¹ not all members participating
² involving goods, services, telecommunications, transport (full liberalisation of railways from 2012), energy (full liberalisation from 2007)
³ telecommunications, transport and energy - proposed
⁴ sensitive goods to be covered from 2019
⁵ least developed members to join from 2012
⁶ least developed members to join from 2017
⁷ Additionally some non member states also participate (the European Union, EFTA have overlapping membership and various common initiatives regarding the European integration).
⁸ Additionally some non member states also participate (ASEAN Plus Three)
⁹ Limited to "entitled persons" and duration of one year.

References

Mansfield and Milner 2005, 333.
Milner 2002, 450.
Schott 1991, 2.
O'Loughlin and Anselin 1996, 136.
Lal, Deepak (1993). "Trade Blocs and Multilateral Free Trade" (PDF). Journal of Common Market Studies. 31 (3): 349–358. doi:10.1111/j.1468-5965.1993.tb00468.x.
Milner 2002, 458.
Mansfield and Milner 2005, 330.
"Stages of Economic Integration: From Autarky to Economic Union".
"WT/COMTD/N/11". wto.org. Archived from the original on 2009-03-25.
"WT/COMTD/N/21". wto.org. Archived from the original on 2009-03-27.
"Prensa Latina". Prensa Latina. February 3, 2007. Archived from the original on September 27, 2007.
"WT/REG238/M/1". wto.org. Archived from the original on 2009-03-04.
"Definidos critérios para o Parlamento do Mercosul". Senado Federal – Notícias. February 3, 2007.
Twelfth Andean Presidential Council Act of Lima Archived 2010-07-07 at the Wayback Machine
"?". CNN. February 3, 2007.
"Russia, Kazakhstan, Belarus form Eurasian Economic Union". Washington Post. May 29, 2014. Retrieved June 1, 2014.
"Archived". www.itar-tass.com. Archived from the original on September 30, 2007.
"GCC customs union fully operational". The Peninsula. 2016-08-13. Archived from the original on 18 January 2015. Retrieved 11 January 2015.
Yemen Proposes Replacing Arab League With Arab Union, Agence France-Presse, 11 February 2004
"Asean Trade Mins Meet To Speed Up Plans For Single Market". Malaysia Dual Lingual Business News. February 3, 2007. Archived from the original on 2007-09-28.
"Envisioning a single Asian currency". International Herald Tribune. February 3, 2007.
"ASEAN To Sign Accord On Visa-Free Travel". AHN – All Headline News. February 3, 2007. Archived from the original on 2007-09-26.
"ASEAN Leaders Sign Five Agreements at the 12th ASEAN Summit, Cebu, the Philippines, 13 January 2007" (Press release). ASEAN Secretariat. 2007-01-13. Archived from the original on 2012-03-16. Retrieved 2007-01-28. On the first day of the 12th ASEAN Summit, five Agreements have been signed by ASEAN leaders – reinforcing their commitment in the continuing integration of ASEAN and enhancing political, economic and social cooperation in the region.
"ASEAN defense ministers aim for security community". ABS-CBN. February 3, 2007. Archived from the original on June 27, 2006.

Bibliography

Mansfield, Edward D. and Helen V. Milner, "The New Wave of Regionalism" in Diehl, Paul F. (2005). The Politics of Global Governance: International Organizations in an Interdependent World. Boulder: Lynne Rienner Publishers. ISBN 978-1-55587-654-8.
Milner, Helen V., "International Trade" in Carlsnaes, Walter; Thomas Risse; Beth A. Simmons (2002). Handbook of International Relations. London: SAGE Publications. ISBN 978-0-7619-6304-2.
O'Loughlin, John; Luc Anselin (1996). "Geo-Economic Competition and Trade Bloc Formation: United States, German, and Japanese Exports, 1968–1992". Economic Geography. 72 (2): 131–160. doi:10.2307/144263. JSTOR 144263.
Schott, Jeffrey J. (1991). "Trading blocs and the world trading system". World Economy. 14 (1): 1–17. doi:10.1111/j.1467-9701.1991.tb00748.x.

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[1] Mansfield and Milner 2005, 333.

[2] Milner 2002, 450.

[3] Schott 1991, 2.

[4] O'Loughlin and Anselin 1996, 136.

[5] Lal, Deepak (1993). "Trade Blocs and Multilateral Free Trade" (PDF). Journal of Common Market Studies. 31 (3): 349–358. doi:10.1111/j.1468-5965.1993.tb00468.x.

[6] Milner 2002, 458.

[7] Mansfield and Milner 2005, 330.

[8] "Stages of Economic Integration: From Autarky to Economic Union".

[9] "WT/COMTD/N/11". wto.org. Archived from the original on 2009-03-25.

[10] "WT/COMTD/N/21". wto.org. Archived from the original on 2009-03-27.

[11] "Prensa Latina". Prensa Latina. February 3, 2007. Archived from the original on September 27, 2007.

[12] "WT/REG238/M/1". wto.org. Archived from the original on 2009-03-04.

[13] "Definidos critérios para o Parlamento do Mercosul". Senado Federal – Notícias. February 3, 2007.

[14] Twelfth Andean Presidential Council Act of Lima Archived 2010-07-07 at the Wayback Machine

[15] "?". CNN. February 3, 2007.

[WaPost-16] "Russia, Kazakhstan, Belarus form Eurasian Economic Union". Washington Post. May 29, 2014. Retrieved June 1, 2014.

[17] "Archived". www.itar-tass.com. Archived from the original on September 30, 2007.

[18] "GCC customs union fully operational". The Peninsula. 2016-08-13. Archived from the original on 18 January 2015. Retrieved 11 January 2015.

[AFP-19] Yemen Proposes Replacing Arab League With Arab Union, Agence France-Presse, 11 February 2004

[20] "Asean Trade Mins Meet To Speed Up Plans For Single Market". Malaysia Dual Lingual Business News. February 3, 2007. Archived from the original on 2007-09-28.

[21] "Envisioning a single Asian currency". International Herald Tribune. February 3, 2007.

[22] "ASEAN To Sign Accord On Visa-Free Travel". AHN – All Headline News. February 3, 2007. Archived from the original on 2007-09-26.

[23] "ASEAN Leaders Sign Five Agreements at the 12th ASEAN Summit, Cebu, the Philippines, 13 January 2007" (Press release). ASEAN Secretariat. 2007-01-13. Archived from the original on 2012-03-16. Retrieved 2007-01-28. On the first day of the 12th ASEAN Summit, five Agreements have been signed by ASEAN leaders – reinforcing their commitment in the continuing integration of ASEAN and enhancing political, economic and social cooperation in the region.

[24] "ASEAN defense ministers aim for security community". ABS-CBN. February 3, 2007. Archived from the original on June 27, 2006.